140. I am sure you have heard Mr, now Lord, Healey's
dictum, "If you are in a hole, stop digging." There
has been a great deal of digging and there is undoubtedly a hole.
The question is, whether the Government goes on digging or not.
It is very interesting that in the Tropus report on page 18, paragraph
7.1, second paragraph, they talk about £140 million for a
Cardiff-type scheme. The fact is, we have a Cardiff-type scheme,
have we not, and it is known as the Millennium Stadium, and the
Cup Final has been played there for the past two years and it
has become de facto though not de jure the national
stadium, and no doubt next year, lacking any other venue, the
FA will play the Cup Final there again, so why build another one?
We have got one, it is used, people go to it.

(Mr James) If you are asking me

141. It is not fair, I know.

(Mr James) I did not come at it from
that direction, I came at it from the point that the country had
scope and need for some settled major national stadium. The Welsh
would regard Cardiff perhaps as their national stadium, what about
the English? Do we not get one too?

142. We paid for it. Our Committee went there
and we saw it being built.

(Mr James) Without being nationalistic
on this, can the English not have one?

Derek Wyatt

143. I am interested in the implications of the
athletics-enabled part of this stadium. Having been to World Championships
and Olympics, you have to have a warm-up track, unlike Atlanta,
which has to be close, within walking distance, because you warm
up and you have to be then physically ready, it is no good getting
in a coach and driving three miles and cooling down to warm up
again. So for the stadium to be athletics-enabled would mean there
would be a warm-up track in land you do not own. I am confused
as to how it can be athletics-enabled and satisfy the actual gravity
of a Sport England Lottery grant, I wonder if you could help me
on that.

(Mr James) I think I would have to defer
that question to Mr Cunnah because my perception of this stadium
was that it was intended to be primarily football with some ability
to convert within certain parameters to athletics, but it was
primarily football, and that made sense with the fact it was the
Football Association with which we were dealing.

144. But there are only two events it can be
athletics-enabled for, one is the World Championships, and initially
that was the problem, and the other is the Olympics. So if we
are not going to bother with those, there is no point making it
enabled but that makes the £120 million repayable. Perhaps
you could explain how you are going to do the warm-up track.

(Mr Cunnah) One of the reviews we have
undertaken since 19 December is the appropriateness of the stadium
for athletics. It was an independent review led by Sport England
and it has concluded the new platform actually is now more appropriate
than the previous onecheaper and quickerso a good
option. Beyond the stadium, of course, the surrounding facilities
become the responsibility of UK Athletics or British Olympic Association
(BOA) or Sport England, not the Football Association, however,
as part of the review they did look at things like where you would
have a warm-up site, conscious of course, as you have pointed
out, there are only two tournaments for which perhaps you would
use the national stadium and therefore they could be a long time
in the future. However, in co-operation with Brent, I understand
there are up to four sites which have been identified, as and
when the World Championships or the Olympics are gained, which
could be used.

145. We looked at all those before. Anyway, thanks
for that answer. The introduction on page 3 of 37 says, "The
report has been prepared at the request of Sir Rodney Walker",
what led him to ask for the report, given he has about 72 hats
to wear at any one committee meeting?

(Mr Cunnah) I think Sir Rodney's reaction
to being told of these allegations by Tropus was very simply,
"You need to put those in writing so we can address them",
and indeed that is what happened.

146. Forgive me, but why black out paragraph
1.2 then? I could go on and ask you why you have blacked out this
and blacked out that. What is the point of saying, "If it
is jointly, it must be UK Sport and somebody else"?

(Mr Cunnah) We did requestand
we do thank you for ita closed hearing because there are
elements of confidentiality, we believe, in the replies which
relate to these reports, both commercial confidentiality and in
respect of individuals who are named in the report.

147. Can I ask Mr James next. The thrust of your
letter points to the preference of re-tendering the contract for
building a stadium at Wembley, but in fact that is not what you
recommended. The thrust of your letter seems to suggest something
else. So is the reason you came to that conclusion, is the same
point you have made before, the risk?

(Mr James) There was an earlier draft
of the report which would have occurred during early November
possibly, at which point we were recommending proposing very strongly
they had to go for a re-tender. That was the only way out of the
dilemma. They subsequently persuaded me this was not practicable,
and I was given a great deal of information to understand why
the timetable had to be met, and that effectively I should recognise
the recommendation was, abort completely, or alternatively go
forward within these parameters, but you cannot go for a re-tendering,
we would simply not meet the timetable and we would lose the value
of the ability to retain the extra land, which we heard of earlier,
which was regarded as essential to the whole enterprise.

148. You are saying there was a first draft.
I see we have a third draft.

(Mr James) Yes.

149. The first draft was August/September?

(Mr James) I believe it was November.
The first draft would have been late October, very early November,
and the second draft was in November.

150. I have misunderstood something. You also
said earlier you did not tell the Secretary of State of something
by

(Mr James) I am sorry. You are talking
about our report, the BLP report? You are not talking about the
Tropus report?

151. I am talking about the Tropus report.

(Mr James) I am sorry, I am at cross-purposes
with you. The report which we published came in some several different
drafts, and in the earlier draft I had proposed re-tendering.
That was removed from the final draft.

152. Yes, and the Secretary of State was presented
with this when?

(Mr James) The Tropus report?

153. Yes. Or both actually.

(Mr James) I answered the Chairman earlier
on by saying this was presented to the Secretary of State on Sunday
16 December but I have been hit with a barrage of notes from my
legal friend on my right, saying she does not believe that is
right. So I am going to ask, if we may, to verify that and come
back to you separately.[20],[21]

154. Of course. What about the other report.

(Mr James) Definitely the James/Berwin
Leighton Paisner report was presented to the Permanent Secretary
on the night of Friday 14 December 2001 and was definitely seen
by the Secretary of State during Sunday 16th.

Mr Doran

155. You said earlier to the Chairman when you
had investigated the allegations of impropriety and perhaps dishonesty
that everything was clear and clean about the project. You did
give a caveat to that but I accept what you are saying, but that
still leaves me a little troubled, particularly when we look at
the issue of this public money which is involved. Certainly the
Tropus report seems to be fairly clear, it is at least clearly
implied, that the contractors managed to exploit the muddle, perhaps
even incompetence, of poor management to get themselves into a
fairly favourable position. Was there no thought in your mind
that that should be perhaps reflected in further discussions with
the contractors to see what could be renegotiated to try and get
WNSL into a better position?

(Mr James) The only contact we had with
the contractor was on our insistence over the weekend of 16 and
17 December, when it was clear that the Department of Culture
was looking for us to close the report as a pre-condition for
the Secretary of State to be able to make an announcement, hence
we curtailed the remainder of the process and signed off the report
on the 17th to that purpose. The only thing we did was that, before
we could meet that extremely tight timetable, we insisted upon
getting a letter from the contractor to the effect that they would
confirm they were abiding by certain principles themselves and
they had acted unambiguously and without any inference or reference
to any other contractual negotiations.

156. At that time no contract had been signed,
and there are clear allegations that there was an awful lot of
exploitation of the situation in a variety of ways but you did
not feel it appropriate to make any recommendation in that respect?

(Mr James) No. I think I have read in
the press sinceand I should add my own involvement on this
ended on 9 January, I have had no direct involvement sincethat
the contractor has been threatening quite vociferously that he
will raise the price if the work does not commence by a certain
date. So I think the pressure has been coming from the other direction.
There certainly was not time to even contemplate a re-negotiation.

157. That still is on WNSL's head. On the question
of the expenditure prior to your involvement, which you have been
able to review, it is mentioned in the Tropus Report for example
that on the hotel project, which we discussed earlier, round about
£20 million was spent. We have £120 million coming from
Government, £106 of that is spent on buying the land and
presumably there are various other costs in terms of consultants,
et cetera, plus this £20 million and plus presumably staged
payments to the various contractors, so that is quite a lot of
money which is being spent and certainly more than £120 million,
so WNSL has accumulated a significant number of debts already.

(Mr James) You would have to ask Mr Cunnah
for that, I am afraid.

158. How are these being funded? Is the FA funding
it or are there other bank loans we do not know about?

(Mr Cunnah) There are three sources of
funding for WNSL to date. The business was acquired in March 1999
using the Lottery funds. Lottery funds fully financed that acquisition
and also some of the design costs which have been incurred to
date. Also we operated the stadium for about 20 months and therefore
there were profits which were generated during that time which
became a source of funding for the project. In addition to that,
yes, the FA has been providing financing.